You are Janice Joyner, a young partner in the Transnational Projects Department of the Houston office of the Dallas-based firm, Smudgens & Sealy. Lately your time has increasingly been occupied by the burgeoning overseas operation of your firm’s new encircling client, UnivEnergy.

When you got to your office this morning, the first voice on your Phone Mail was that UnivEnergy’s General Counsel, Rick Prestud:

“Janice, I hope you can hear me. This Rick Prestud, and you’ll never guess where I am. Malabo, Equatorial Guinea! I’ve been here for two sweltering weeks, trying to close our concession award. I probably haven’t told you much about that project, because we have been handling it all in-house. If we can ever get that concession up and running, UnivEnergy will have exclusive exploration rights to a very promising slice of the Gulf of Guinea, right offshore Mbini.

“What I’m  calling about is extremely confidential. That’s why I’m calling you rather than sending an e-mail. I know this telephone line is safe, and I don’t want any words about UnivEnergy’s problem roaming around my laptop.

“When UnivEnergy decided to go big-time and complete internationally with major energy companies, we figured that Equatorial Guinea was the place to start: small enough to get to know easily, geologically a treasure, and as far as we can tell, not under  the wing of any big, established energy company.  When we decided to bid on Equatorial Guinea offshore concessions, everybody told us that Alberto Ngana was the only lawyer to use. I’m not what all of his connections are –the Minister of Energy is Alberto’s brother in-law, for sure, and some people say that the President is a silent partner in Alberto’s law firm-but, whatever those connections are, they certainly seem to work.

“When we asked Alberto to help us, at first he wanted his representation of UnivEnergy to be what he called ‘semi-exclusive.  As Alberto explained it, that means that at the beginning he could advise several bidding companies ‘generally’  but when a small group of companies were selected for the final round of bidding, those selected companies would handle that final round of their own, without Alberto’s intervention. Then, after the winner was selected, Alberto could step back in and represent the winning company in negotiations with the Ministry of Energy about verbiage details of the actual award. UnivEnergy didn’t like that ‘semi exclusive’ idea, and insisted that Alberto represent UnivEnergy exclusively, all the way from the beginning through the final selection and award. Alberto agreed to do that, for a contingent fee.

“So what we worked out was this: With Alberto’s help, we drafted, word for word in official Spanish,  the form of the exploration concession exactly as we wanted it: geographical boundaries, duration, conversion to production rights upon discovery, royalty, taxation, and all the rest. And we drafted a form whereby the Minister of Energy would sign and certify that Equatorial Guinea had granted such a concession to UnivEnergy. Then we got Domain Bank in Houston to issue a standby letter of credit, with Alberto as the beneficiary, whereby Domain Bank would pay the beneficiary one million U.S. dollars upon presentation in the agreed form.

“I realize that one million dollars sounds like a lot of money, but that area offshore Mbini is the hottest thing in the Gulf. We already have firm offers from two mod-size energy companies to apy us two million each for only one-fourth interests. We thought we would close everything with them this week, after the concession was awarded.

“On Monday the Ministry awarded concession to UnivEnergy. There was a fancy ceremony, with speeches and all the rest. That very night, Alberto took off for Houston to present the Minister’s certificate to Domain Bank and collect Alberto’s Contingent fee. Then on Tuesday the problem happened, and we can’t figure out what was the cause. Without any advance notice to UnivEnergy, the Office of the president issued an executive decree stating that, although the concession was duly issued to UnivEnergy and lawfully in effect, the Office of the President had ‘extended the pre-exploration phase’ of the concession for an ‘indefinite period.’ Pending ‘reaching an amicable consensus regarding the technological application of certain portions of its terminology.’ If you understand what that means, you are way ahead of me!

“By the time we heard of the executive decree, the President had left Equatorial Guinea for his vacation palace of Costa Brava, leaving us completely baffled about the whole thing. When we went to the President’s office for information, they referred us to the Ministry of Energy. When we went to the Ministry of Energy, they told us that the Minister of Energy, too,  is on vacation, and referred us back to the President. When we asked the U.S. Ambassador for help, he was baffled as we are. And Alberto’s law office in Malabo is empty, except a sleepy receptionist who says “Mr. Ngana is in Houston on business.”.

“Malaboo is steaming with gossip, and I don’t know what to believe. The most plausible story is that there was a falling out between the President and the Minister of Energy. Apparently the president heard about Alberto’s million-dollar letter of credit, the President assumed that the Ministry was getting part of it, and the President wanted part of it for himself. Perhaps, as a silent partner In Alberto’s law firm; the President felt that the million should go to the law firm, not to Alberto alone.

“My best guess it that it’s all just a squabble among the three of them about how to divide up the million. They don’t want to cancel the concession, or to start the bidding all over again; they just need to agree on how to share the spoils. So I think our last strategy will be to try to keep Domain Bank from paying on the letter of credit until the three of them sort out their squabbling.

“ A few minutes ag I called Ed Slocomb, the Vice President of Domain Bank in Houston, to find out whether Alberto has presented the Minister’s certificate and demanded payment under this letter of credit. I know Ed fairly well, but he sounded rather formal and bankerish on the telephone. He said that, sure enough, Alberto presented the certificate this morning, and the Bank ‘will duly examine the stipulated documents for compliance.’

“I asked Ed how long that would take, and he said that the letter of credit is governed by UCP 500 and Texas UCC Chapter 5, each of which allows examination during seven business days after presentation. I told Ed that UnivEnergy has ‘some concerns’ about the documentation and that I would appreciate the opportunity to present those ‘concerns’ to Domain Bank. Ed didn’t exactly promise to wait all those seven business days for my presentation, nut I’m satisfied that he will give me three of four days to get back to Houston, organize my ‘concerns,’ and present them to Domain Bank.

“I’ve chartered some flights that will get me to Houston late tomorrow evening. I’m going to need all the help you and your team to give me, night and day. Isn’t there some way we can sue Domain Bank or Alberto, and stop the payment? Don’t call Ed Slocomb yourself; he’ll get alarmed about litigation, if he thinks our outside lawyers are involved. Just give me a quick, confidential memorandum about what to do. Have it sealed and hand-carried to my secretary, who will meet me at the charter airport in Houston. I’ll call you at home when I have read it, and then we can plan our strategy.”

Please prepare your memorandum.